Sulu award is not binding

THE Paris Court of Appeal had, on July 22 last year, stayed the enforcement of the final award in the claim laid by the heirs of the Sultan of Sulu against Malaysia for historical cession payments. The French court held that the award presented a risk of serious prejudice to the territorial sovereignty of Malaysia and that warranted a stay.

Despite the stay order on the US$15bil (RM68.6bil) award against Malaysia, the Sulu heirs, through their lawyer, have demanded the Malaysian government make immediate payment of the award, which now purportedly amounts to several million more with added interest and legal and arbitration fees (“AG lodges police report against Sulu heirs’ counsel over false claims”, The Star, June 2; online at bit.ly/star_sulupay).

But legally, payment of such an award cannot be obtained merely by a letter of demand. The Paris award is not binding and enforceable in Malaysia unless it is recognised as such by making it a judgment of the High Court in Malaysia.

The legal phrase is “recognition and enforcement of a foreign arbitration award”. In Malaysia, this matter is governed by Section 38 of the Arbitration Act 2005.

Under this Section, the Malay-sian High Court may recognise and enforce awards where the seat of arbitration is in Malaysia or, in the case of a foreign arbitration award, where the award is from a country that is a contracting party to the Convention on the Recognition and Enforce-ment of Foreign Arbitral Awards, commonly known as the New York Convention.

The convention was adopted by Malaysia on Nov 5, 1985. It is an international agreement entered into by, as of 2021, 168 contracting countries to honour agreements to arbitrate disputes and to recognise and enforce arbitration awards granted in other contracting countries. France is a contracting country.

In Malaysia, an application for recognition and enforcement of a foreign arbitration award can be made at the High Court pursuant to Order 69 of the Rules of Court 2012.

The application may be made by the party enforcing the arbitration award without giving notice to the other party to the award. However, the High Court retains the discretion to require the enforcing party to serve a copy of the application on the other party.

So, were the Sulu heirs giving prior notice to the Malaysian government by their letter of demand dated May 28, which was received by the Attorney General Chambers (AGC) on May 29?

A foreign arbitration award can be recognised and enforced in Malaysia. The party enforcing the award has to appoint a Malaysian law firm to file an application at the High Court for the award’s recognition and enforcement.

When it comes to an award against the Federal Government of Malaysia or a state government, the party seeking the award must apply for the issuance of a certificate under Section 33 of the Government Proceedings Act 1956.

An application for the certificate is to be made after the application under Section 38 of the Arbitration Act is granted.

In simple words, the Paris award is not binding and enforceable in Malaysia until it is recognised as binding and made enforceable by the High Court in Malaysia.

HAFIZ HASSAN

Bukit Baru, Melaka